Also see "Blurring".
The Federal Trademark Dilution Act specifically excludes non-commercial use of a mark from its coverage. 15 U.S.C. § 1125(c)(4)(B).
What is Dilution? The Seventh Circuit Court of Appeals tried to define it in Ty Inc. v. Ruth Perryman No. 02-1771 (7th Cir., October 4, 2002).
Though directed at preventing the erosion of a famous mark's capacity to distinguish goods and services, the Lanham Act does not specify how dilution occurs or how it may be detected and measured. State dilution statutes do, however, shed some light on this unsettled area of the law. Courts applying state dilution statutes recognize that dilution occurs in two ways: (1) when a junior mark causes "tarnishment" of the famous mark and (2) when the use of the junior mark causes "blurring" of the famous mark's power to identify and distinguish goods and services.
Dilution provides a cause of action in areas of unfair competition not covered by the passing off doctrine. The dilution doctrine has now been codified in the statutes of a majority of states. Each of these states has adopted a version of the Model State Trademark Act, which states in § 12:
Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark registered under this Act, or a mark valid at common law, or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.
In 1992 a revision was made to the state Model Bill which provided that a mark must be famous. The Bill also provided for a seven-part list of factors to be used in determining whether a mark is famous. Furthermore, the 1992 version of the Model State Trademark Bill also defined dilution as "the lessening of the capacity of a mark to identify and distinguish goods or services, regardless of the presence or absence of (a) competition between the parties, or (b) likelihood of confusion, mistake or deception."
While many states have adopted their own form of trademark dilution law, state dilution generally requires that a mark be distinctive and that the defendant's mark is likely to dilute the plaintiff's mark. This dilution occurs in either of two ways: (1) when a junior mark causes "tarnishment" of the famous mark and (2) when the use of the junior mark causes "blurring" of the famous mark's power to identify and distinguish goods and services.
In Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418 (2003), the Supreme Court stated that the trademark holder has to show acutal dilution to win. Congress them amended the Trademark Dilution Act to a "likelihood of dilution" standard. The TDRA was passed in response to the Court's holding. Owners of famous trademarks now have a cause of action against any person who uses a trademark or trade name in commerce that is "likely to cause dilution" of a famous trademark - significantly lowering the evidentiary barrier to recovery.
Some dilution court cases: